Did you know a $1,000 investment in Amazon in 1997 would be worth over $1 million in 2021?
It’s no wonder the stock market is the investment market of choice for more than 50 percent of American households. The stock market can make you fabulously wealthy — no question about that.
However, you’re probably wondering why all those households that have stock market holdings aren’t filthy rich. It’s because investing in stocks, just like making any other investment, is a complicated science. Investing in stocks isn’t a rookie’s game.
Read on to learn how to get started investing in stocks.
Brush Up What You Know About the Stock Market
Like many rookie stock market investors, you probably know a thing or two about the stock market. You certainly know the basics of investing in stocks: buy shares of a certain company that’s publicly traded and wait for their value to increase, then sell and pocket a profit.
While investing in stocks sounds straightforward, there’s a lot that happens behind the scenes. For instance, there are several factors that can influence the movement of a specific stock and the stock market as a whole. You want to be familiar with these factors as they’ll be handy when you want to pick stocks to invest in.
We encourage you to take shorts online courses about investing in the stock market. You can also read books or other material prepared by successful investors. For instance, you don’t want to miss out on Warren Buffett investment principles.
Choose How You Want to Invest
There are three approaches you can take: DIY (do it yourself), work with an investment specialist, or use robo-advisors.
Investing in stocks involves financial risk, so it’s advisable to let an investment specialist do the investing on your behalf. However, this is typically an option that’s attractive to large-scale investors.
As a beginner, chances are you want to be in charge of your stock mark investment destiny. As such, you’ll need to open an investment account. There are many stockbrokers offering accounts, so be sure to do some research and settle on the best broker.
Using robo-advisor is also a good idea as you get started. Robo-advisors are tech platforms, such as websites and mobile apps, that automate stock investments. You just deposit some money with a robo-advisor and they’ll do the rest.
Set a Budget
How much money do you need to start investing in stocks?
This is a common question among beginner investors. The good news is you don’t need hundreds of thousands of dollars to start investing. You can start with as little as $100, but the amount you’ll need will be determined by the stocks you want to invest in. Some stocks cost a few dollars while others cost upwards of $1,000.
Either way, you need to set a budget before you start investing. Keep in mind that you can lose your capital when investing in stocks, so you should only set aside money that you can afford to lose.
That’s How to Get Started Investing in Stocks
The stock market is a proven source of wealth, but it can also be a source of pain and financial losses. Knowing how to get started investing in stocks can make the difference between finding success and losing your money. Put this advice to use.
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